Can I refinance existing kit to release working capital?

Yes — many UK businesses can refinance existing equipment (“kit”) to release working capital using asset refinance, sale and hire purchase back, or sale and leaseback. These facilities secure funding against machinery, vehicles, or other hard assets you already own (fully or with equity). If your business and assets qualify, funds can often be released within days, not weeks.

What kit refinance is and how it releases cash

What is kit refinance?

Kit refinance is a form of asset-based lending that raises cash against equipment your business already owns. Lenders value the asset and advance a percentage of that value, paid into your business as working capital. You then repay the finance in fixed instalments over an agreed term.

Core structures used in the UK

• Sale & Hire Purchase Back: You sell the asset to a finance provider and simultaneously buy it back on hire purchase terms. You keep using the kit while releasing cash.
• Sale & Leaseback: Similar to the above, but structured as a lease. You sell the asset, release funds, and lease the kit to continue using it.
• Refinance of existing agreements: An existing HP or lease may be refinanced to reduce monthly costs, extend term, or release additional equity if values allow.
• Secured business loan on assets: A term loan secured by specific kit, typically used when title is clear and valuations support the advance.

How much working capital can you release?

Lenders typically advance up to 70–80% of Forced Sale Value (FSV) for strong, marketable assets. Older or niche equipment may attract a lower advance, sometimes 50–65% of FSV. The amount depends on asset type, condition, age, resale market, and your business profile.

Why businesses choose this route

• Preserve cash: Turn sunk cost in equipment into usable working capital.
• Protect other credit lines: Keep overdrafts and unsecured facilities free for day-to-day needs.
• Predictable repayments: Fixed monthly costs help with budgeting and cash flow planning.

In short: If you own valuable kit, asset refinance can be a practical, secured route to inject cash back into your operation without selling equipment or diluting equity.

Eligibility, asset types, and valuation basics

What assets can typically be refinanced?

• Plant & machinery: CNC machines, lathes, mills, food processing lines, packaging machinery.
• Vehicles & fleets: HGVs, vans, specialist vehicles, coaches, plant and agricultural machinery.
• Printing & fabrication: Digital presses, litho presses, guillotines, wide-format printers, cutters, welders.
• Construction & logistics: Excavators, telehandlers, cranes, forklifts, warehousing equipment.
• Healthcare & technology: Imaging equipment, lab apparatus, certain IT and production technology.

Lenders prefer hard, moveable assets with a clear secondary market and recoverable value. Highly bespoke or bolted-in plant can be harder to refinance unless strong valuations are available.

Who is eligible?

• UK limited companies or LLPs: Most lenders focus on established trading entities.
• Trading history: Typically 12 months+ of trading, proven revenue, and sensible affordability.
• Ownership & equity: Unencumbered assets, or assets with sufficient equity after settling any existing finance.
• Condition & age: Good condition and reasonable age with identifiable serial numbers and maintenance records.

Every lender has its own policy, but a credible asset, clear title, and stable trading are common requirements. Where an asset is still on finance, you’ll usually need a settlement figure and to demonstrate equity exists.

How valuations work

Most decisions are based on FSV (Forced Sale Value) rather than retail or replacement cost. Independent valuations, market data, and asset inspections may be used. The stronger and more liquid the secondary market, the higher the appetite to lend.

Documents you’ll usually need

• Latest filed accounts and recent management figures.
• Business bank statements (typically 3–6 months).
• Asset list with make, model, age, hours/mileage, and serial numbers.
• Proof of ownership, invoices, and maintenance records.
• Settlement letters if the kit is currently financed.

Providing clear, accurate documentation up-front speeds the process and can improve outcomes.

Process, timeframes, costs, and key risks

What’s the typical process?

1. Initial enquiry: Share details of your business, the asset(s), and the funding amount required.
2. Indicative terms: If the assets and profile fit, you’ll receive an in-principle view or a heads of terms.
3. Valuation & checks: Lender obtains valuation data, verifies title, and conducts affordability and credit assessments.
4. Offer & legals: Formal offer issued; you review terms, fees, and any security or guarantees.
5. Completion & funds: Agreements are signed, any existing finance is settled, and net funds are released.

Timeframes: Indicative terms can arrive in 24–72 hours; completion is commonly within 3–10 working days, subject to complexity and valuations.

Rates, fees, and terms (indicative)

• Rates: From c. 6%–18% APR+ depending on asset strength, credit profile, and term. Rates vary and are subject to status and market conditions.
• Terms: 12–60 months is typical; shorter or longer terms may be available for certain assets.
• Fees: Arrangement fees, documentation fees, valuation/inspection costs, and early settlement charges may apply.

Because facilities are secured on the asset, pricing often compares favourably to unsecured working capital loans. Exact costs hinge on your circumstances and the asset quality.

Key risks and considerations

• Security & repossession: The asset secures the finance; missed repayments can lead to recovery.
• Personal guarantees: Some lenders request PGs, especially where assets are older or more niche.
• Early settlement costs: Check terms for exit fees or interest rebates before you sign.

Always ensure the monthly repayment comfortably fits projected cash flow. Refinance should solve cash constraints, not create them.

Tax and accounting notes (speak to your accountant)

• Interest may be tax-deductible for corporation tax purposes, subject to your circumstances.
• Sale & leaseback/HP back: VAT treatment and capital allowances can be complex; structure carefully to avoid unexpected VAT charges.
• Balance sheet impact: HP, lease, or loan treatments differ under accounting standards; get advice before proceeding.

This article is for information only and is not tax or accounting advice. Professional advice is recommended.

When kit refinance works best — and alternatives to consider

Where kit refinance shines

• Asset-rich businesses: Manufacturing, construction, logistics, agriculture, and engineering often hold suitable kit.
• Seasonal cash cycles: Release cash to cover stock build, wages, or project mobilisations.
• Consolidating multiple payments: Restructure existing agreements into a simpler, predictable schedule.

It’s especially useful when your assets have strong resale value and you want to preserve unsecured borrowing capacity for other needs.

Possible limitations

• Limited equity: If the asset is new or already highly leveraged, there may be little to release.
• Specialist or static assets: Highly bespoke kit with unclear resale markets can be harder to fund.
• Very early-stage companies: Many providers prefer at least 12 months of trading and stable revenues.

Where refinance isn’t a fit, consider adjacent funding routes that better match your cash cycle and collateral position.

Alternatives to explore

• Invoice finance: Unlock cash from unpaid invoices; helpful for B2B firms with 30–90 day terms.
• Unsecured working capital loans: Faster and flexible, but generally higher rates and lower limits.
• Revolving credit facilities: Draw what you need and repay as cash comes in, for ongoing flexibility.
• Merchant cash advance (card takings): For card-heavy sectors; repayments flex with turnover.

Sector nuances matter. For example, printing businesses often refinance presses or finishing equipment to fund consumables, staffing, or new sales activity.

Quick comparison (headline points)

• Asset refinance: Secured on kit; potentially lower cost; funding size tied to asset value.
• Unsecured loan: No asset security; faster decisions; usually higher rates and smaller limits.
• Invoice finance: Secured on receivables; scales with sales; needs reliable debtor book.

The “best” option is the one that aligns with your assets, cash flow timing, and appetite for security and covenants.

How Best Business Loans can help — and what to do next

Who we are and what we do

Best Business Loans is an independent platform that helps UK businesses navigate the market and connect with suitable lenders and brokers. We do not lend or provide advice; we introduce you to relevant providers based on your profile. Our aim is to make finding asset refinance and other business finance options quicker and clearer.

What to expect after you enquire

1. Quick Quote: Complete a short form describing your business, assets, and funding needs.
2. AI matching: Our system analyses your details and matches you with providers active in your sector and asset type.
3. Introductions: You’re connected to suitable lenders or brokers to explore terms without contacting dozens of firms.
4. Your decision: Compare offers and choose the route that best fits your cash flow and risk tolerance.

It’s fast, secure, and free to submit an enquiry. There’s no obligation to proceed.

Checklist to speed up an approval

• Full asset details (make, model, year, serial, condition, photos).
• Proof of ownership and original invoices.
• Existing finance settlement letters (if applicable).
• Latest management accounts and 3–6 months bank statements.
• Purpose of funds and preferred monthly budget/term.

Clear documentation and a realistic funding ask help providers respond with sharper, more competitive terms.

Compliance, transparency, and fair presentation

• This content is clear, fair, and not misleading and is provided for information only.
• Best Business Loans does not offer loans or give advice; we introduce you to third-party providers.
• Eligibility, rates, and terms are subject to status, credit checks, asset valuations, and provider criteria.
• Fees and charges may apply; always read provider documents before committing.
• Consider independent financial, legal, tax, and accounting advice before entering agreements.

Updated: October 2025. We aim to keep this information current, but markets and policies change.

Key takeaways

• Yes, you can refinance existing kit to release working capital via sale & HP back, sale & leaseback, or secured loans.
• Typical advances: Up to 70–80% of FSV for strong, marketable assets; lower for older or niche kit.
• Speed: Indicative terms in 24–72 hours; completion often within 3–10 working days.
• Use cases: Cash flow smoothing, growth projects, consolidating finance, and preserving unsecured facilities.
• Next step: Submit a Quick Quote to be matched with suitable asset finance providers.

Ready to explore kit refinance? Start your Quick Quote now to check indicative eligibility and get connected to suitable providers.